Resource rent tax will stifle investment, cost jobs

The chief executive of West Australian iron ore producer
Fortescue Metals Group
,
Andrew Forrest
, says a resource rent tax on the mining industry could "kill the golden goose" that is leading Australia out of the global financial crisis.

Several West Australian iron ore explorers and miners came together in Perth on Friday to express their opposition to the proposed resource rent tax being flagged by the Henry tax review.

The iron ore companies said a resource rent tax would stifle investment in the mining sector, cost jobs and hamper Australia's emergence from the global financial crisis.

There has been speculation that the Henry review will recommend that state-based royalties be scrapped and replaced by the new resource rent tax.

However WA Premier Colin Barnett has said that WA will still require companies to pay state taxes.

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Mr Forrest said the mining industry already paid corporate tax and very large royalties, and was being relied upon to drive Australia out of the global financial crisis.

Removing the mining industry's ability to retain its earnings would remove its ability to fund itself and expansions.

"If we continue to tax out of existence those industries which are generating the wealth Australia needs to grow out of the global financial crisis, then we can expect a one-speed economy," Mr Forrest said.

"The one-speed economy will be what the Prime Minister (Kevin Rudd) referred to as the slow-speed economy.

"We'd rather have encouragement of a high-speed economy to bring the low-speed economy with it.

"What you shouldn't do is kill the golden goose ... you'll find you have no more eggs."

Mr Forrest said he would like to see tax used as an incentive to invest.

BC Iron
Ltd managing director Mike Young said a resource rent tax would result in "double taxation", limiting the earnings of a small company such as BCI Iron and leaving it with less to re-invest in WA's Pilbara region.

"It means that we would then to have to go offshore to raise money, and that means moving ownership of our company offshore," Mr Young said.

"Furthermore, what it means is that the money we do have to invest we will look at investing offshore in jusrisdictions which have more favourable tax."

The executive chairman of Murchison Metals Ltd, Paul Kopejtka, said he was concerned that the mining industry was about to be hit with "a double tax", which could hurt growth in emerging regions such as WA's mid-west.

"Potentially, it could put jobs at risk, investment inflows to the region, and, of course, the general well-being of people in that region," Mr Kopejtka said.

"I do say to the federal government to give it very careful consideration and to look very closely at this proposal and to certainly consider the negative impacts that this rent tax could potentially have."